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Campbell Soup Company in Trouble

Campbell Soup Company in Trouble
Case Code: BSTR556
Case Length: 21 Pages
Period: 2015-2018
Pub Date: 2018
Teaching Note: Available
Price: Rs.500
Organization: Campbell Soup Company
Industry: Food and Beverages (F & B) industry
Countries: United States
Themes: Strategic Management, Business Economics, Business Environment
Campbell Soup Company in Trouble
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case discusses the problems of US-based global food company Campbell Soup Company (Campbell's) in its home country, the US. Despite its high popularity, the company experienced several consecutive quarters of declining sales. Campbell's tried to re-engineer its portfolio several times through a series of strategic acquisitions and investments to cater to the changing tastes and preferences of consumers, who were opting for fresh food rather than canned food. The company negotiated with competitors who focussed on healthier and fresher foods in the belief that this would give it a fresh image beyond the old-fashioned canned soup. Campbell's geared up its organic food supply chain, recalled defective products, and explored new ways of connecting with the millennials through digital strategies. But all these efforts failed to rescue the company and the situation worsened for it in the first two quarters of fiscal 2018. Campbell's posted a net loss per share and its gross margin came down in the third quarter of 2018. The company's lackluster performance was a matter of concern for investors who were uncertain about the very future of Campbell's. Its long-serving CEO, Denise Morrison (Morrison), stepped down after her bet on fresher foods failed to revive the sales of the company. Rating agency, Moody's reviewed the company's credit rating for downgrade following a sharp fall in its profitability and Morrison's decision to exit. Morrison's sudden resignation created more trouble for the company, which was already struggling to cope with changing consumer behavior. Going forward, will the new CEO be able to turn the company around?

Issues

The case is structured to achieve the following teaching objectives:

  • Evaluate the popularity of canned soup in the food and beverage industry
  • Understand the problems faced by processed and canned food companies amid changing consumer behavior
  • Understand how companies address the changing preference for fresh and organic foods

Contents

Keywords

Falling sales; Macroeconomic factors; Changing consumer behavior; Consumers' control over market; Labeling and branding; in-store promotions; pricing; Two-factor theory; Product recall; Recall classification

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